Official Opinion 95-33

July 7, 1995

To:

Commissioner of Insurance

Re:

Companies providing alternative insurance coverage in lieu of workers' compensation insurance may be required to participate in the Workers' Compensation Insurance Plan by a rule properly promulgated under the Administrative Procedure Act.

You have asked for an official opinion regarding whether the Commissioner of Insurance has the authority to require that insurers providing alternative insurance coverage in lieu of workers' compensation insurance pay an assigned risk assessment as part of the Georgia Workers' Compensation Insurance Plan. Further, you have asked what would be the proper procedure for implementing such a requirement if it is authorized. Based on the following analysis, it is my official opinion that insurers writing alternative coverage in lieu of statutory workers' compensation insurance may be required to participate in the Plan and pay an assessment pursuant to a rule properly promulgated under the Administrative Procedure Act.

Official Code of Georgia Annotated § 34-9-1 et seq. sets forth the Workers' Compensation Act. In lieu of statutory workers' compensation insurance, the Act authorizes employers to obtain coverage through a substitute system of compensation, benefit or insurance, referred to here as "alternative coverage." O.C.G.A. § 34-9-14(a). This alternative coverage is required to "contain all provisions required of a standard policy of workers' compensation insurance issued in this state, including a workers' compensation benefits policy and an employer liability policy." O.C.G.A. § 34-9-14(a)(3). Because insurers writing alternative coverage are authorized by O.C.G.A. § 34-9-14(a), they are subject to all provisions in Chapter 9 of Title 34.

Official Code of Georgia Annotated § 34-9-133 authorizes the Commissioner of Insurance to establish or approve a method to apportion on a pro rata basis any rejected workers' compensation policies. This provision does not set forth the precise contours of the method of apportionment that must be established by the Commissioner nor does it specify the particular type of insurer to which the method of apportionment may apply. Instead, O.C.G.A. § 34-9-133 gives the Commissioner broad authority to establish or approve a method of apportionment.

Pursuant to this broad authority, the Commissioner established the Georgia Workers' Compensation Insurance Plan ("the Plan") as the approved method for apportioning rejected workers' compensation policies. Ga. Comp. R. & Regs. r. 120-2-38 et seq. (1984). The Plan's rules require that every insurer authorized to write workers' compensation insurance in Georgia must fully cooperate in the Plan and comply with all rules, procedures, and guidelines of the administrator as a condition of its authority to transact insurance in Georgia. Ga. Comp. R. & Regs. r. 120-2-38-.07 (1984). By virtue of the fact that insurers writing alternative coverage are subject to all provisions in Chapter 9 of Title 34, they may be required to participate in this Plan. As part of the Plan, these insurers may then be subject to an assessment.

Although insurers writing alternative coverage may be required to participate in the Plan, a rule specifying their inclusion should be adopted in accordance with the Administrative Procedure Act, O.C.G.A. § 50-13-1 et seq. Under the Administrative Procedure Act, any rule, regulation, resolution, which falls under the definition of a "rule," in O.C.G.A. § 50-13-2, must be adopted pursuant to the Administrative Procedure Act, if it is to be valid against any person or party. 1971 Op. Att'y Gen. 71-158. A "rule" is defined as any "agency regulation, standard, or statement of general applicability that implements, interprets, or prescribes law or policy or describes the organization, procedure, or practice requirements of any agency." O.C.G.A. § 50-13-2(6). Because including insurers who write alternative coverage in the Plan is a "statement of general applicability that implements and interprets law," the operating rule requiring their participation should be adopted pursuant to the Administrative Procedure Act in order to be valid. Once the rule is properly adopted it will have a designated effective date, which may be sooner than January 1, 1996.

In sum, it is my opinion that the Insurance Commissioner may require insurers writing alternative coverage, pursuant to O.C.G.A. § 34-9-14, to pay an assessment as part of the Georgia Workers' Compensation Insurance Plan. However, a rule specifying their inclusion in the Plan must be adopted pursuant to the Administrative Procedure Act.